Best Way To Finance A Franchise ? We've Got Them !

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How To Finance A Franchise

Franchise Financing Options ! You're there. You have made the decision. You're committed. You have timelines now. We're talking about your franchise finance decision and the next challenge you have in the franchise process - financing a franchise. How many ways to finance a franchise are there? Only one... the right way! And we'll show you how.

Steps to a Successful Best Way To Finance A Franchise

The ability to finance your franchise properly and satisfy the requirements of the franchisor without putting you overly in debt is what it’s all about of course. And if you do it right then you of course have the potential to grow a business, profit from it, and build owner equity for either long term resale of personal financial gain. That's simply what it's all about, and boy does it help if you like what you are doing, at the same time taking on the entrepreneurship role in Canadian business.

The good news is that your are lucky, because franchising couldn’t be any hotter or more popular. Franchises move goods and services in the billions in Canada, and you're now part of that movement.

But let’s be realistic, whether it’s a franchise investment of any other business start up the same critical needs apply relative to planning and financing.

Homework. Did you hate it in school? Well here it is again because we strongly suggest to clients that you are now in homework mode when determining how financing a franchise works. It’s all about planning, which includes ensuring you have a profitable potential business on your hands, as well as understanding ways to finance a franchise in Canada.

Business plans are critical to your franchise investment. It's a case of demonstrating your business has both profit potential plus, and this is what interests the lender, that you have the ability to repay your debt and loans. The franchisor naturally is interested in long term success of the chain, and your ability to pay royalties as they become due, usually monthly.

When you address the franchise finance decision you must consider a number of items - they are as follows - what is the total all in cost, what methods are available to finance each part of the cost breakdown, and finally, and perhaps most importantly, how is the actual financing done.

The costs to assess in a franchise finance investment are as follows - the initial franchise fee, the cost of fixed assets or leaseholds to your business - i.e. equipment, signage, vehicles if required, etc. And finally, if you did all that and didn’t address working capital for ongoing operations and growth then you are setting yourself up for failure.

Clients are always looking to us for a magic solution and a one stop finance strategy for their franchise investment. The closest we can come to that is the government BIL/CSBF loan, under which the majority of franchises are financing in Canada. You can successfully augment this strategy by equipment financing for a variety of assets as well as a small working capital loan, usually unsecured. Don't forget also that your own owner equity investment becomes the final piece of the puzzle.

Other ways to finance a franchise include term loans, equipment financing, etc. Bottom line is that the entrepreneur has options . Franchise financing lenders exist, you just have to know how to access them .

And getting back to our business plan, ensure that you have covered off all the debt you need and that if reflects your ability to pay it back.

Financing a franchise. Challenging? Yes, we guess so. Possible? Of course. Speak to a trusted, credible and experienced Canadian business financing advisor with franchise experience and a track record of business financing success who will help you navigate, successfully, the only way to finance your new business - the right way!





7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

Critical Info On How To Finance A Franchise? Financing Franchising Costs In Canada

Financing The Canadian Franchise


Information on how to finance a franchise in Canada . Financing costs vary in Canada per program and the lender . Here’s why!


How to finance a franchise in Canada becomes an immediate and looming decision # 2 , right after your having made that choice to enter this industry as an entrepreneur / business owner .

But what about the financing costs for yourself, the new franchisee? What is financeable, what is not, and who can you turn to for help, guidance, etc.
Naturally it goes without saying that the actual financing of your new business can be the difference between making it... and the other less then favorable option... failing.

Let's examine some key franchise basics for the Canadian entrant into the industry. Where is that financing going to come from? It general it boils down to two parties, you with some type of equity / down payment component, and a financing partner. That financing partner can potentially be two finance firms, one specialized firm, or a bank. More about the bank later... and trust us, its good news!! Not what you might be thinking!

You will notice that we have eliminated one party that many new franchisees think they are going to get help from, and that’s your franchisor! The reality is that although some indirect help should be expected you should not expect a cheque from them to help finance the franchise. Why? They are in the selling business, not the finance business, as simple as that.

It's important to spend some time in your business plan (yes, correct, you heard right ... you need a business plan) to give some thought to and break down the actual components of the franchising costs. Those categories are typically assets, working capital, leaseholds and franchise costs. In some larger franchise purchases there might even be a real estate component to your deal, but that’s a bit rarer. Oh and don't forget that franchise fee!

One you have your breakdown in front of you it’s critical to start to determine what is financeable and what is not, and then focus on who is going to finance those components.

Typically the franchisee fee is not financeable in Canada... in essence we can call it the goodwill component of your balance sheet, just as it would be in the purchase of a business in a non franchise industry . That ties nicely into our next point, which is simply that your down payment or equity part of the deal typically also has to cover the franchisee fee. In a typical franchise in the 350k range in Canada we tend to see that fee in the 25k range.

Many business owners focus only the cost of the franchise and getting to the goal line on their purchase. They forget however that sales don't necessarily start strong on day 1, and your fixed costs and payroll can catch up with you pretty quickly.

So don't forget to take a hard look at the working capital component of you deal, which should be thought about, and addressed! in the business plan. Naturally working capital in the retail industry is a lot less of a requirement than in a non retail business ... it’s the difference between a cash business and waiting for someone to pay you.

In Canada there are only 1 or 2specialized franchise finance firms which entertain a full financing of your franchise. If you don't qualify for that scenario, or if your franchisor is not part of that program a solid solution is the BIL/CSBF loan program. It's a government guaranteed loan that allows you to finance equipment, leaseholds, etc up to 350k, which covers a large majority of costs in most franchises. And by the way, interest rates, terms and structures are excellent, and you don’t even have to personally guarantee the full amount.

Focus early on relative to you challenge of how to finance a franchise in Canada. Your business plan is key, as is your choice of financing partner or assistance. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance needs as a new entrepreneur in this major Canadian industry segment.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE FINANCING EXPERTISE



Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_financing_costs.html

Your Antidote On How To Finance A Franchise Loan In Canada - Secrets of Franchise Financing Companies / Banks

Canadian Franchise Financing Tips and Info


Information on how to finance a franchise in Canada . What do you need to know about franchising companies and banks to successfully complete a loan / financing.




Entrepreneurs searching for their ' antidote ' to the question ' how to finance a franchise ' in Canada seek to unlock the secrets of banks and franchising companies in Canada. We think we have earned the right (via experience) to have learned and now share some of those tips, secrets, and strategies on successful franchise financing in Canada.

You're somewhat close to being successful already when you have chosen to purchase a franchise in Canada, simply because you're buying what is hopefully a proven business model that has a higher probability of success oftentimes than starting your own firm. And it’s a two way deal; because your franchisor needs you to be successful that is how they succeed themselves!

Canada also has solid franchise disclosure rules and regulations, which help protect the investment you are about to finance - and that’s a good thing!

Naturally the goal of your business is to be profitable, so significant care should be done around your investigation into the overall profitability model - remember also that those profits pay back your franchise loan / loans.

To finance a franchise in Canada, successfully, revolves around two key concepts: knowing your start up costs, and being able to assess ongoing working capital needs. The latter is sometimes forgotten or receives less attention, and that’s not good!

Assessing your start up costs and ongoing working capital and cash flow needs involves the financial portion of your business plan. It's not as hard as you think, it’s just a simple case of taking a basic spreadsheet and focusing on the inn’s (your projected sales)... and the outs... your expenses in each category. Those include rent, royalty payments, and a salary draw for yourself, your cost of goods ... etc. At the end of the day it’s highly desirable to have money left, aka ' profit'!

In Canada franchise loans are usually 5-7 year term long; occasionally they might be longer but certainly in our experience 5-7 is the norm.

There is a limited, in fact, only one full service franchising company in Canada that provides financing. They tend to be involved in larger national programs, and can assist with acquisition financing, refinancing of a current location, new builds, and in some cases real state if in fact that’s required. A very heavy focus is placed on traditional cash flow coverage. To non financial people we can simply explain that if your debt is 1 dollar in your business you have to be able to prove or demonstrate cash flow of around 1.25 ( a buffer is created ) to pay back the financing . Transactions from this firm tend to be larger in size.

But what about the hundreds of other firms out there who may not be aligned under such a program? Where do their franchisees go for help? Here is where it’s prudent to talk to two folks; one is a trusted, credible and experienced Canadian business financing advisor who has experience in franchise finance. The other is a guy name ' BILL ‘. Actually, that’s B I L, and it stands for a specialized loan program that perfectly suits what many franchisees are attempting to achieve in a solid franchising loan. It also have very attractive rates, terms an structures that even larger more established firms cant achieve, i.e. lower personal guarantees, no penalty to repay, etc.

So, bottom line. As usual its focus on a franchise model that makes sense and suits your experience. Be prepared for a reasonable equity investment on your part, and seek the services of either a very specialized franchising companies that focus on finance, or, even better, the help of an expert who can package a solution that suits your individual situation. Those are solid antidotes to the ' how to finance a franchise ' question!




Stan Prokop - founder of 7 Park Avenue Financial -


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_franchising_companies.html

What Every Entrepreneur Should Know About How To Finance A Franchise In Canada – Financing Your Investment

Canadian Franchising Finance Explained

Information on how to finance a franchise in Canada . Best methods for financing your entrepreneurial decision in this business investment.



It tends to start with the franchisee fee itself, but there are a number of other financing challenges that come into play when the Canadian entrepreneur is faced with the basic question - ' hot to finance a franchise ' in the Canadian marketplace. Financing one of the most important business investments you'll make can be a challenge - so let’s identify some key issues, tips, and strategies on being successful in this challenge.

A solid way to look at finance success in your franchising ' adventure' is to break down your estimated costs into several key areas. Most potential franchisees don’t realize that each key aspect of your franchise purchase is financed in a different manner.

Lets breakdown the key elements of a franchise investment. They include the franchise fee itself, which we have already referred to. Other components usually equipment you may need, leasehold improvements to any new facility, potentially real estate , as well as the often forgotten but as important on going working capital .

Our experience is that the franchisee typically in Canada has to cover the franchisee fee him or her self. That then leaves our other components to address. So is financing a franchise in Canada a challenge ?In some respects it has the same challenges as if you were opening any new business from scratch - however, the good news is that the financing industry as a whole tends to view franchises positively because franchisors, when successful, have proven brands, track records, etc .. in general they are considered, we think, a lower risk that many other ' start ups'

We sometimes forget to mention to clients the possibility that they may be in fact purchasing an existing unit from the franchisor - that typically involves buying a company or corporate location that the franchisor wants to sell, or, in some cases purchasing a franchise from an existing franchisee who is motivated to sell for whatever reason. Bottom line, both new and existing franchises and be financed.

We are quite sure that when most franchisees consider how to finance a franchise investment they think that financing might in fact come from a Canadian chartered bank. Well, here’s the facts on that one... it does... and it doesnt. While it is somewhat rare that your bank would directly finance 100% of you franchisee needs under a normal term loan scenario the banks do play a key role in franchising in Canada.

How? They do it under the auspices of the Canadian BIL/CSBF program which offers a competitive term loan for Canadian franchisees under the umbrella of this program. The benefits of that program are significant - they include financing up to $, 350,000.00 as well as a low personal guarantee. Rates are excellent, and terms are flexible. Criteria for the program essentially are a decent personal credit history of the prospective franchisee, as well as a respectable owner investment into the business.

Whats respectable?! We knew that question was coming next. Typically to be successfully anywhere from 10-40% investment is required by you as the franchisee. While one commercial finance firm in Canada dominates franchise financing individual franchisees can compliment financing needs with equpment financing, business lines of credit , business credit cards, and the increasingly popular merchant advance loans for retail oriented businesses.


Both having a finance plan and knowing how to execute on your plan are what will make you successful when you are faced with today’s questions ' how to finance a franchise ' ... Speak to a trusted , credible and experienced Canadian business financing advisor for help and tips you need to be successful as a franchisee entrepreneur in Canada .



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_financing_investment.html

How To Finance A Franchise In Canada – Make Franchise Financing Work!

Is there a perfect, foolproof method on how to finance a franchise in Canada? Naturally there are no sure things in business, but financing a franchise has a 99% chance of success, if, and it’s a big if, you are prepared and have expert knowledge on how this type of business financing is done in Canada.

It’s not secret that franchise finance is hot! From the downsizing of companies in Canada and the U.S. to simple entrepreneur dreams thousands of would be ' business owners' are looking to explore the franchise dream for personal and business success.

Franchise financing pays off, as we said, if you are well prepared. You also have to be in a position to understand that the concept of OPM, or ' others peoples money ' doesn't work in any business, let alone a start up franchise. By that we simply mean that you have to have somewhat of an investment to make in the business. Those funds must be accessible and you have to be in a position to demonstrate the source of those funds.

Typically our clients make their equity deposits into a franchise business from savings, or friends and family type donations. In many cases they have either liquidated assets, i.e. savings, or perhaps collateralized their home via personal line of credit, etc. The bottom line is simply that you should generally be in a position to put 30-40% down as your own investment in the business.

You are now in a position of being able to find the remaining funds you need to both purchase, and of course run the business on an ongoing basis.

We will now show you have to finance that franchise. First of all, ensure you have a proper cost breakdown. That should be broken down into soft costs and hard costs. Soft costs are typically items such as the franchise fee, etc. The real hard costs are the assets and leaseholds and equipment you are purchasing, which should be broken into those three categories.

As much as clients hate to do it, you need a business plan that describes you, your experience, the business, its potential. When you address the key issue of how to finance a franchise you must demonstrate in the financial section how your loan or newly acquired debt will be repaid. If you don’t have experience in preparing such a plan an expert can prepare one fairly economically - we view it as a true investment in financing franchise businesses.

So who exactly is in the franchise financing business in Canada from a lender perspective? One guy is BILL. That's an attempt at humor, as the BIL program, formally known as the Business Improvement Loan program is by far the largest funder of franchise in Canada. That program, coupled with some specialty lending in the areas of equipment and working capital allow you an excellent chance to get your franchise financed.

In summary, when addressing how to finance a franchise in Canada know your costs, summarize your proposal in terms of yourself, the business, and its financial potential, and ensure you are in a position to present the transaction in a professional manner to an experienced franchise financing lender. Speak to a credible, experienced and trusted Canadian business financing advisor if you need assistance in your entrepreneurship financing goals in franchising.
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Stan Prokop - founder of 7 Park Avenue Financial -
http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_franchise_financing.html